Things To Consider When Buying A Home - Winter 2021 by Jaqua Realtors

THINGS TO CONSIDER WHEN

BUYING A HOME

WINTER 2021

EDITION

CONTACT ME TO TALK MORE I'm sure you have questions and concerns about the real estate process. I'd love to talk with you about what you read here and help you on the path to selling your house. My contact information is below and I look forward to hearing from you.

Lee Crossley Sales Manager Jaqua Realtors LCrossley@JaquaRealtors.com (269) 998-0123

Why You Shouldn’t Wait Until Spring to Buy a Home The housing market recovery has been nothing short of remarkable. Many experts agree the turnaround from the nation’s economic pause is playing out extremely well for real estate, so it’s framing up to be an ideal time to buy a home for those who are ready to make a purchase. Here’s a dive into some of the biggest wins for homebuyers this season. 1. Mortgage Rates Are Low In 2020, mortgage rates hit all-time lows more than a dozen times, falling below 3% for the first time ever. Continued low rates have set buyers up for significant long-term gains. realtor.com notes: “Given this means homes could cost potentially tens of thousands less over the lifetime of the loan.” Essentially, it’s less expensive to borrow money for a home loan today, a huge opportunity for buyers to capitalize on right now, before rates start to rise. 2. Buying Is More Affordable Than Renting This trend toward low mortgage rates has made the typical monthly payment (including principal and interest) less expensive for buyers. According to realtor.com: “Over the past year, many counties have seen the difference between the cost to purchase a home compared to the cost to rent a home improve toward favoring buying a home.” Buying a home versus renting one may be a game-changer, as it amplifies long-term savings for homeowners. When paying a mortgage, as opposed to paying rent, that money is reinvested back in your favor. Instead of contributing to your landlord’s savings, you’re contributing to your own net worth. This is a term called equity, and it is one of the biggest financial benefits of owning a home. 3

3. Equity Is Growing According to John Burns Consulting, 58.7% of homes in the U.S. have at least 60% equity, and 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear. In addition, CoreLogic notes the average equity mortgaged homes have today is $177,000. That’s a tremendous amount of forced savings for homeowners. With this much equity in place for the typical homeowner, the chance of the market seeing a rush of foreclosures is not likely. Today’s homeowners have many options to avoid foreclosure, such as selling their homes and leveraging that equity to protect their investment. As a buyer, you can rest assured that your homeownership investment is a sound one, and foreclosures are not expected to dominate the market as they did when the housing bubble burst over 10 years ago. 4. Home Prices Are Appreciating According to leading experts, home prices are forecasted to continue appreciating. Today, many experts are re-forecasting their projections in an upward direction, anticipating home prices to continue rising through 2021. Knowing home values are increasing while mortgage rates are so low should help you feel confident that buying a home this year is advantageous from a price perspective, and a strong long-term investment. Bottom Line If you’re considering buying a home, this may be your moment, especially with today’s low mortgage rates. Let’s connect to assess your changing needs and set you up for success in the homebuying process.

A New Meaning for Homeownership Today, Americans are purchasing homes for a variety of different reasons. The current health crisis has truly re-shaped our lifestyles and needs, prompting many of us to think more about what we truly want in a home. Spending extra time where we currently live is enabling many people to re-evaluate what homeownership means and what they find most important in a home. According to Zillow: “In 2020, homes went from the place people returned to after work, school, hitting the gym or vacationing, to the place where families do all of the above. For those who now spend the majority of their hours at home, there’s a growing wish list of what they’d change about their homes, if possible.” With a new perspective on homeownership, here are some of the top reasons people are reconsidering where they live and thinking differently about what they need in a home. 1. Working from Home Remote work is becoming the new norm, and it’s continuing on longer than most initially expected. Many in the workforce today are discovering they don’t need to live close to the office anymore, and they can get more for their money if they move a little further outside the city limits. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR) notes: “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.” 5

If you’re renting a small space or recently tried to convert your dining room into a home office with minimal success, it may be time to make a change. The reality is, your current house may not be optimally designed for today’s lifestyle, making remote work and continued productivity very challenging. 2. Virtual and Hybrid Schooling Many school districts are using a model of virtual or hybrid learning, turning their curriculums into digital formats for students. If you have school-age children, you may have a need for a dedicated learning space. If so, it might be time to find a home that provides your youngsters with the same kind of quiet room to focus on their schoolwork, just like you likely need for your office work. 3. A Home Gym Staying healthy and active is a top priority for many Americans. With various levels of concern around the safety of returning to fitness facilities across the country, dreams of space for a home gym are growing stronger. The Home Builders Association of Greater New Orleans explains: “For many in quarantine, a significant decrease in activity is more than a vanity issue – it’s a mental health issue.” Having room to maintain a healthy lifestyle at home – mentally and physically – may prompt you to consider a new place to live that includes space for at-home workouts. 4. Outdoor Space Especially for those living in an apartment or a small townhouse, outdoor space is a new priority for many as well. Zillow also notes the benefits of being able to use your yard throughout the year: “People want more space in their next home, and one way to get it is by turning part of the backyard into a functional room, ‘an outdoor space for play as well as entertaining or cooking.’” You may, however, not have the extra square footage today to have these designated areas – indoor or out. Moving May Be Your Best Option If you’re clamoring for extra room to accommodate your changing needs, it may be time to take advantage of today’s low mortgage rates to find your perfect home. It’s a great time to get more home for your money, just when you need it most. Bottom Line Today, many peoples’ needs have changed. If you’ve been trying to decide if now is the right time for you to buy a home, let’s connect to discuss your options. 6

Home Price Appreciation Is on the Rise Due to the undersupply of homes on the market today, there’s significant upward pressure on home prices. When there’s high demand for an item and a low supply of it, consumers are willing to pay more for that item. That’s what’s happening in today’s real estate market. The housing supply shortage is also resulting in more bidding wars, which drive price points higher in the home sale process. In addition, there’s no evidence that buyer demand will wane. As a result, experts project home price appreciation will continue over the next twelve months. Here’s a graph of the major forecasts going forward. What does a rise in prices mean for buyers?

Home Price Appreciation

Forecasts over the Next 12 Months

5.9%

5.5% 4.5% 3.7%

3.1% 1.9%

Zillow

Zelman

Freddie Mac

NAR

HPES

MBA

CoreLogic

When purchasing a home, it’s important to feel confident about your investment, and that it will increase in value over time. Home prices have been rising for 104 straight months, and are forecasted to continue going up, meaning your investment is a sound one. It also means purchasing a home before prices continue to climb might be your best move. Today, some are concerned that homeowners who entered a mortgage forbearance plan might face foreclosure once their plan ends. However, when you analyze the data on those in forbearance, it’s clear the actual level of risk is quite low. Ivy Zelman, CEO of Zelman & Associates and a highly-regarded expert in housing and housing-related industries, notes: “The likelihood of us having a foreclosure crisis again is about zero percent.” With demand high, supply low, and little risk of a foreclosure crisis, home prices will continue to appreciate. Bottom Line Originally, many thought home prices would depreciate due to the economic slowdown from the health crisis. Instead, prices appreciated substantially. Over the next year, home values will likely rise even higher given the continued lack of homes for sale. 8

Steps to Take If You Want to Buy a Home If you’re thinking about buying a home, there are some important things you can do to keep the process moving forward. From saving for your down payment to pre-approval for a mortgage, you can work confidently toward homeownership today. 1. Learn About the Process and How Much You Can Afford The process of buying a home is not one to enter lightly. You need to decide on key things like how long you plan on living in an area, school districts you prefer, what kind of commute works for you, and how much you can afford to spend. Keep in mind, when you start, you’ll want to get pre-approved for a mortgage. Lenders will evaluate several factors connected to your financial track record, one of which is your credit history. They’ll want to see how well you’ve been able to minimize past debts, so make sure you’ve been paying your student loans, credit cards, and car loans on time. According to ConsumerReports.org: “Financial planners recommend limiting the amount you spend on housing to 25 percent of your monthly budget.” Pre-approval will help you better understand how much you can afford so you can confidently make a strong offer and close the deal. Today’s low inventory means homebuyers need every advantage they can get. If you were pre-approved prior to the beginning of the health crisis, you may need to go through the process again, as lending standards have evolved in recent months. 11

2. Save for Your Down Payment & Closing Costs In addition to knowing how much you can afford on a monthly mortgage payment, understanding how much you’ll need for a down payment and closing costs is another critical step. What’s a Down Payment? According to Bankrate: “A home down payment is simply the part of a home’s purchase price that you pay up front and does not come from a mortgage lender via a loan.” Thankfully, there are many different down payment assistance resources available to potentially reduce the amount you may need to put down on your home purchase. What Are Closing Costs? Trulia says: “When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.” If you’re concerned about saving for these items, start small and be consistent. A little bit each month goes a long way. Jumpstart your savings by automatically adding a portion of your monthly paycheck into a separate savings account or house fund. AmericaSaves.org indicates: “Over time, these automatic deposits add up. For example, $50 a month accumulates to $600 a year and $3,000 after five years, plus interest that has compounded.” Before you know it, you’ll have enough in your savings if you’re disciplined and thoughtful about your process. Bottom Line If homeownership is on your wish list, identify what you can prioritize now to help you get there. Let’s connect to determine the steps you should take to start the process today.

Buying a Home: Do You Know the Lingo? Here’s a list of some of the most common terms used in the homebuying process that you’ll want to know. Appraisal – A professional analysis used to estimate the value of a home. A necessary step in validating a home’s worth to you and your lender as you secure financing.

Closing Costs – The fees required to complete the real estate transaction. Paid at closing, they include points, taxes, title insurance, financing costs, and items that must be prepaid or escrowed. Ask your lender for a complete list of closing cost items. Credit Score – A number ranging from 300-850 that's based on an analysis of your credit history. Helps lenders determine the likelihood you’ll repay future debts. Down Payment – Typically 3-20% of the purchase price of the home. Some 0% down programs are also available. Ask your lender for more information. Mortgage Rate – The interest rate you pay to borrow money to buy a home. The lower the rate, the better. Pre-Approval Letter – A letter from a lender indicating you qualify for a mortgage of a specific amount. Real Estate Professional – An individual who provides services in buying and selling homes. Real estate professionals are there to help you through the confusing documentation, find your dream home, negotiate any of the details that come up, and let you know exactly what’s going on in the housing market.

The best way to ensure your homebuying process is a confident one is to find a real estate pro who will guide you through every aspect of the transaction with ‘the heart of a teacher’ by putting your family’s needs first. Freddie Mac – My Home Section

Things to Avoid After Applying for a Mortgage Once you’ve found the right home and applied for a mortgage, there are some key things to keep in mind before you close on your home. You're undoubtedly excited about the opportunity to decorate your new place, but before you make any large purchases, move your money around, or make any major life changes, consult your lender – someone who is qualified to tell you how your financial decisions may impact your home loan. Below is a list of things you shouldn’t do after applying for a mortgage. They’re all important to know – or simply just good reminders – for the process. 1. Don’t Deposit Cash into Your Bank Accounts Before Speaking with Your Bank or Lender. Lenders need to source your money, and cash is not easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer. 2. Don’t Make Any Large Purchases Like a New Car or Furniture for Your New Home. New debt comes with new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios. Higher ratios make for riskier loans, and then sometimes qualified borrowers no longer qualify. 3. Don’t Co-Sign Other Loans for Anyone. When you co-sign, you’re obligated. With that obligation comes higher ratios as well. Even if you promise you won’t be the one making the payments, your lender will have to count the payments against you. 17

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person, in mind that according the National Association of Realtors (NAR), there are That taskkeep is significantly easier whento there’s consistency among your accounts. Before you ways to proceed safely. Here areyour a few of the guidelines, understanding that the top priority transfer any money, speak with loan officer. should always be to obey state and local restrictions first: 5. Don’t Apply for New Credit. It doesn’t matter whether it’s a new credit card or a new car. activity When •youLimit havein-person your credit report run by organizations in multiple financial channels • Require guestsauto, to wash use an (mortgage, credit card, etc.),their yourhands FICO®orscore willalcohol-based be impacted. sanitizer Lower credit scores can • Remove shoes rate or cover with booties determine your interest and maybe even your eligibility for approval. • Follow CDC guidance on social distancing and wearing face coverings 6. Don’t Close Any Credit Accounts. Many buyers believe having less available credit makes Getting comfortable with likely your agent – a true trusted advisor – taking these steps under them less risky and more to be approved. Wrong. A major component of your scorethe is new safety be your best This istoespecially if you’reand in ayour position your lengthstandards and depthmight of credit history (asplan. opposed just your important payment history) total whereof you needastoa sell your house sooner rather later.accounts has a negative impact on usage credit percentage of available credit.than Closing both of those determinants of your score. Bottom Line Bottom Line In a new era of life, things are shifting quickly, and virtual strategies for sellers may be a great option. your doorsorupcredit to digital approaches mayand be executed game-changing when comes to Any blipOpening in income, assets, should be reviewed in a way thatitensures selling yourloan house As always, a trusted estate professional help you safely your home canthis stillseason. be approved. If your job or real employment status has can changed recently, and through all that’s newplan when it fully comes to making next move. Let’s shareeffectively that withnavigate your lender as well. The best is to disclose and your discuss your intentions connect makebefore it happen. with yourtoday loan to officer you do anything financial in nature.

18 17

Notes After leveraging technology, if you have serious buyers who still want to see your house in

person, keep in mind that according to the National Association of Realtors (NAR), there are ways to proceed safely. Here are a few of the guidelines, understanding that the top priority should always be to obey state and local restrictions first: • • • •

Limit in-person activity Require guests to wash their hands or use an alcohol-based sanitizer Remove shoes or cover with booties Follow CDC guidance on social distancing and wearing face coverings

Reasons to Hire a Real Estate Professional

Bottom Line

In a new era of life, things are shifting quickly, and virtual strategies for sellers may be a great option. Opening your doors up to digital approaches may be game-changing when it comes to selling your house this season. As always, a trusted real estate professional can help you safely and effectively navigate through all that’s new when it comes to making your next move. Let’s connect today to make it happen.

Contracts

Pricing

We help with all disclosures and contracts necessary in today’s heavily regulated environment.

We help you understand today’s real estate values when setting the price of a listing or making an offer to purchase.

Experience

Negotiations

We are well-educated in real estate and experienced with the entire sales process.

We act as a buffer in negotiations with all parties throughout the entire transaction.

Understanding of Current Market Conditions We simply and effectively explain today’s real estate headlines and decipher what they mean to you. 17 19

Notes After leveraging technology, if you have serious buyers who still want to see your house in

Limit in-person activity Require guests to wash their hands or use an alcohol-based sanitizer Remove shoes or cover with booties Follow CDC guidance on social distancing and wearing face coverings

Getting comfortable with your agent – a true trusted advisor – taking these steps under the new safety standards might be your best plan. This is especially important if you’re in a position where you need to sell your house sooner rather than later. Bottom Line In a new era of life, things are shifting quickly, and virtual strategies for sellers may be a great option. Opening your doors up to digital approaches may be game-changing when it comes to selling your house this season. As always, a trusted real estate professional can help you safely and effectively navigate through all that’s new when it comes to making your next move. Let’s connect today to make it happen.

Notes After leveraging technology, if you have serious buyers who still want to see your house in

Limit in-person activity Require guests to wash their hands or use an alcohol-based sanitizer Remove shoes or cover with booties Follow CDC guidance on social distancing and wearing face coverings

TACT ME TO TALK MORE

ou have questions and concerns about the real estate process.

talk with you about what you read here and help you on the path to selling your house. My formation is below and I look forward to hearing from you.

sley

414 W. Milham Avenue

328 W. Milham Avenue

202 44th Street SW

15150 Helmer Road S.

513 Broadway Street

Portage, MI 49024

Grand Rapids, MI 49548

Battle Creek, MI 49015

South Haven, MI 49090

Lee Crossley Phone (269) 381-7653

Commercial, Rental &

Phone (616) 369-1991

Phone (269) 704-1000

Phone (269) 637-6537

Relocation

Fax (616) 257-9578

Fax (269) 704-1001

Fax (269) 637-9037

221 998-0123 S. Drake Road (269)

302 S. Main Street

100 S. Jefferson Suite A

4233 Red Arrow Highway

12374 E D Avenue

Kalamazoo, MI 49009

Plainwell, MI 49080

Hastings, MI 49058

Stevensville, MI 49127

Richland, MI 49024

Phone (269) 685-6858

Phone (269) 704-1000

Phone (269) 983-8051

Phone (269) 629-5612

Fax (269) 685-9912

Fax (269) 704-1001

Fax (269) 983-8041

Fax (269) 629-5776

Sales Manager

Fax (269) 381-6410

Jaqua Realtors

LCrossley@JaquaRealtors.com

Phone quaRealtors.com

(269) 341-4300

Fax (269) 567-7710